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At the other end of the Pacific Ocean, the Jinlong Copper Tube Headquarters in Xinxiang, Henan Province, produces precision copper tubes for air conditioning and refrigeration, which account for one-fifth of the world's total.
"The reason why I want to go to the United States to build a factory is mainly the promotion of our anti-dumping ruling by the United States." Li Changjie, chairman of Jinlong Group, told the First Financial Reporter, and in the process of setting up a site in the United States, the company valued the local Government support and policies.
In recent years, with the industrial upgrading of China, labor-intensive industries represented by the textile industry have begun to shift to Southeast Asian countries, while other industries have chosen to set up factories in Europe and the United States due to raw materials and customers.
Free temptation
When Jinlong decided to set up a factory in the United States, it was the Obama administration’s guide to “return of manufacturingâ€. Since the first two years, the US state governments have been promoting various policies and innovations to attract foreign investment. When Jinlong established a factory in the United States, it obtained free land, affordable energy, and taxes.
According to the relevant agreement signed by Jinlong Copper Tube and the local authorities, the preferential policies won by Jinlong Copper Tube from all levels of government in Alabama have a total value of 200 million US dollars, in addition to the cash discount of 20 million US dollars, including Relevant taxes, exemptions from land costs, and labor training subsidies.
For example, in terms of labor training, the state government invested 3 million US dollars to transform Jinlong's training courses in China into English that the locals can understand, and went to Xinxiang to shoot production live video.
The 300-mu land occupied by Jinlong Construction Plant is also provided free of charge by the local government. The property tax and registration tax of the state income tax and non-educational sections are all exempted. Due to the railway passing through the location of the factory, the local government even invested in the construction of a pass bridge to facilitate the commute to work.
Li Changjie told this reporter that because the labor and materials costs in the United States are more expensive than those in China, it takes about 110 million U.S. dollars to build a plant in the United States. It may only cost 60 million U.S. dollars in China, but after the factory is put into operation, many cost factors even It is cheaper than domestic ones.
For example, the biggest cost required for Jinlong production is copper and other raw materials, while Chile in South America has the world's largest copper mine. Importing copper raw materials from South America to the United States is much cheaper than shipping to China; Another big cost of electricity and other fuel costs, the US local electricity bill is also about half cheaper than domestic.
Not only the copper pipe, but also the paper industry has taken a fancy to the US market.
Taking Sun Paper as an example, Sun Paper plans to build a 700,000-ton fluff pulp production base in Arkansas, with a total investment of about 1.36 billion US dollars. The estimated construction period is 30 months, which will create 250 full-time direct jobs for the local government. Jobs, and 1,000 indirect jobs.
According to the letter of intent for investment cooperation, Arkansas will provide Sun Paper with a series of incentives such as tax incentives and infrastructure construction support funds, which will be implemented by May 1, 2017 to ensure the steady progress of biorefinery projects and finally put into production. run.
It is reported that the growth potential of fluff pulp in the world and China is relatively large, while China's current fluff pulp is basically dependent on imports. The fluff pulp is a wood pulp or grass pulp which has been subjected to bleaching, extraction of an organic solvent, etc., and is a pulp used as an absorbent medium, and is commonly used for sanitary napkins, baby diapers, hospital mattresses and the like. Softwood is the best raw material for the production of fluff pulp, and the lack of Chinese coniferous resources is a realistic choice for building new plants in resource-rich areas.
The papermaking company planning to invest in the United States is not a Sun Paper company. Shandong Tranlin Paper Co., Ltd. plans to invest US$2 billion to build a plant in Virginia, USA, and the project is expected to be completed by 2020.
“China's paper industry is highly dependent on the import of raw materials, the dependence on waste paper imports is around 40%, and the dependence on wood pulp imports is above 50%. However, the right to speak of raw materials in China's paper enterprises is low, so the gross profit margin of paper products is low. "Zhuo Chuang Information analyst Chang Junting told the First Financial Reporter.
Realistic challenge
However, Li Changjie also pointed out that in the United States, the local labor costs are much higher than domestic ones. For example, ordinary workers earn 2,500-3,000 yuan per month in the country, but in the United States, they need 2,000 to 2,500 dollars. Moreover, after the factory was put into production, the involvement of the local trade unions allowed the company to experience many "troubles" that have not been encountered in China, such as workers demanding protection of their rights and interests, increased overtime pay, and labor insurance.
“After the factory was put into production, it was found that workers' work efficiency and labor cost were relatively big problems,†Li Changjie told reporters. Although the local government helped the company train the locals in advance, there are still many difficulties in actual management. So that it has been put into production for two years, the current US factory has not yet fully reached production, and more than 60 engineers and technicians sent by the company have not returned to China.
“Alabama is close to our largest US customer, Goodman Manufacturing. The products sold in the US are relatively expensive compared to domestic ones, but the price of spare parts such as metals is also higher than domestic prices,†said Li Changjie. Tell the reporter that, in contrast, the company's production facilities in Mexico, the cost will be lower than the United States, and it is easier to achieve production and profitability.
In fact, in recent years, Chinese companies like Jinlong who wish to go out to the United States and other foreign factories are not in the minority, because some companies have found that with the rising costs of labor and other costs, the cost advantage of re-exporting products in China, In the gradual weakening, the cost of various factors for production in China is lower than that of the United States, which is driving the “return of manufacturingâ€. Many US regions may have lower costs (for example, many remote areas in the United States are actually very cheap, and Due to the developed transportation network of trucks and trucks, logistics transportation costs will also be reduced).
However, the management of the company who thought of US investment also told reporters that when considering the location of the United States to build a factory, it was originally decided which state would give more cash subsidies, but it was discovered after contact and understanding. In terms of taxes, infrastructure, environmental policies, and even the number and quality of employed people, there are many differences.
“Many companies have built factories in the United States and only want to build them near existing customers, but future customers are not considered. So, first think about what the company is going to build in the US, and consider what the next five years will be. , 10 years, 15 years, 20 years later." Raymond Cheng, president of SoZo Group, told reporters.
In the past few years, the Sanye Group led by Zheng Liming has been looking for opportunities for large-scale manufacturers in China to build factories in the United States. He told reporters that the communities in which the factories are built, the environmental approvals, the level of labor and the willingness to accept foreign cultures, and the level of interest of the local and state governments in the project will all affect the success of the investment. Therefore, find the right state government to support you. The investment is also a question that Chinese companies must consider when entering the United States.
Zheng Liming said that in the decision-making process of investing in the United States, multiple perspectives need to be considered. First of all, see which areas are more supportive of the development of manufacturing, and whether there is such an atmosphere. “For example, there are many auto companies in Detroit. There are also many important manufacturing companies here. The strength of manufacturing is very strong in this region. Now, we also find that auto companies are gradually moving to the southeast of the United States.â€
At the same time, we should also understand the trade union factor. In the southeastern part of the United States, there are no unions in many places. This is better for some companies, because if there are unions, they may encounter many problems.
Another data that needs attention is logistics, including the cost of raw materials and finished goods, such as Indiana in the central United States. In terms of geographic location, no matter what kind of goods are transported throughout the United States, Indiana is the center, so the United States Many of the distribution centers are in the south of Indiana. In addition, pay attention to the infrastructure, such as highways, ports, etc.
Zheng Liming further pointed out that the tax issue is also very important, and it is necessary to fully understand the different tax requirements between some states and states, between cities and cities. In addition, the management of Chinese companies must also pay attention to the cultivation and reserve of international talents, improve corporate governance and adopt Western advanced corporate culture, and recommend that companies find consultants, especially in law, government relations, site selection and financing. aspect.
Peacock flying southeast
In addition to the layout of Europe and the United States, Chinese companies are also moving to Southeast Asia.
“There are many Chinese investors who are investing in Vietnam. When asked why invest in Vietnam, investors generally say two reasons: One is a bigger market.†The chairman of the Vietnam Cotton and Textile Association (VCOSA) Nguyen Van Tuan, deputy secretary general of the Vietnam Textile and Apparel Association (VITAS), explained to the First Financial Reporter, “There is a bigger market because Vietnam has signed free trade agreements with many countries and economies, including Japan, South Korea and even There are South America's Chile, Peru, and Central Asia's Uzbekistan, Kazakhstan and Russia, all of which have related cooperation, so there will be a bigger market."
The other is that the overall cost of production in Vietnam is lower than in China. Nguyen Van Tuan said to the First Financial News: First of all, in terms of labor costs, the current average monthly wage in Vietnam is around $250. Although it has risen a lot compared to the $128 published by the ILO in 2014, it is still far below the current average labor wage in the industry in China.
The rise in labor costs may be unavoidable, but the relevant local governments still give foreign investors the greatest possible preferential policies: such as factory rents, Vietnam's industrial park rents are about 20~60 US dollars / square meter, in China, this rent reaches 150~ 200 US dollars / square meter; Vietnam corporate income tax rate is 20%, China is 25%. Often, new investors are also eligible for a tax-free policy for the first two years, while taxes for the next four to nine years are halved. In addition, Vietnam belongs to the ASEAN countries, and the import of enterprises back into China is zero tariff.
For the domestic apparel and textile industry, the above conditions are indeed attractive.
For local textile and apparel companies in Vietnam, it is obviously not enough for Chinese customers to purchase primary and low-margin products such as cotton yarn. The former still wants to be committed to the manufacture and sale of high value-added fashion cotton textiles.
For example, Fortex, the top five textile industry in Vietnam, has 90% of its customers coming from China. Liu Jun, chairman of Nantong Xinyi Home Textiles, told reporters that as early as five years ago, his company began to cooperate with Fortex to purchase cotton yarn from Vietnam.
As China's domestic comprehensive costs rise, textile companies are forced to seek other outlets due to the pressure of survival. Another reason for these companies to “go out†is the issue of cotton quotas. "In China, the NDRC has strict restrictions on the issuance of quotas. For example, one of the conditions is that the scale of the enterprise should be more than 50,000 ingots. Generally only large enterprises can get quotas." Wang Qianjin, Information Director of Shanghai International Cotton Trading Center, pointed out that 2011~2014 In the year, due to the policy of purchasing and storage, the difference between cotton prices at home and abroad was as high as 4,000-6,000 yuan/ton. It is also in these three years that the industrial transfer has accelerated.
According to the "China Textile News" report, in the highest period of cotton price difference between domestic and foreign countries, a large textile enterprise in Shandong can get 300,000 tons of cotton import quota a year, which can save the enterprise cotton cost of about 1.2 billion yuan. This is an astronomical figure for cotton textile companies with low profits.
Although the price of cotton has been lowered in the past two years, the current price difference between cotton at home and abroad has remained at 1,500-2,000 yuan/ton. "The price advantage of imported cotton is obvious, and the quality of outer cotton is better than that of national cotton, especially US cotton and Australian cotton." Wang Qianjin said that the price of cotton yarn for home textile enterprises is not high, if it is a low count yarn, Southeast Asia Imports only need half of the domestic price. Since it is impossible to import cotton from abroad because of the lack of import quotas, it is not difficult to understand why domestic textile companies choose to purchase cotton yarn directly from abroad.
“Our main form is trade now, Chinese factories are going to buy our company's cotton yarn products.†Fortex Vice President Hoang Xuan Chinh looks forward to more forms of cooperation in the future, “for example, manufacturers work with us to build factories, or investors together. Cooperation.†This is also a big part of their banquets and roadshows in China: attracting more strategic investors.
Even so, it is not easy to invest in Vietnam. Many companies have failed to set up factories in Vietnam. At present, many factories that have successfully set up factories in Vietnam and are successfully put into operation are large enterprises in the domestic clothing and textile field.
Yang Weixin, chairman of Blum Oriental Co., Ltd. publicly pointed out that Vietnam does not lack spinning mills, and lacks fabrics, knitting and printing and dyeing enterprises. However, Vietnam's environmental protection requirements are still stricter than in China, and sewage is 100% qualified to be discharged. Therefore, it is not as easy to enter the Vietnamese market as it is supposed to be.
The same view is also the founder of Tianhong Group, Hong Tianzhu. At present, Tianhong has an investment scale of 1.25 million spindles in Vietnam, with an investment scale of 800 million US dollars, making it the first investment in mainland China. Hong Tianzhu believes that Vietnam is the first choice for China's textile industry to go out, but not all companies are suitable to go out, and the final decision needs to be made according to the company's own advantages and the status of the domestic industry. 
Is the temptation or challenge of Chinese companies building overseas?
Abstract On the construction site of Highway 43 in Alabama, southern United States, the production plant of Jinlong Copper Tube, the world's largest manufacturer of precision copper tubes, is intensifying production. It is also the first factory of Jinlong Copper Tube Group in the United States. The other end of the Pacific Ocean, in Xinxiang, Henan...
On the site of Highway 43 off Alabama in the southern United States, the production plant of Jinlong Copper Tube, the world's largest manufacturer of precision copper tubes, is intensifying production, and it is also the first factory of Jinlong Copper Tube Group in the United States.